Inevitable Diesel price hike in India, some Bhutanese worried and some not

For a change, not necessarily in a good way, especially for Diesel-powered vehicle owners, the Indian PM Manmohan Singh told the ruling congress party to increase prices of heavily subsidized fuels such as diesel.

The last increase in diesel prices for Bhutan was in February this year when it increased from Nu 40.58 to Nu 40.61. Since then Diesel prices did not change while petrol prices saw almost subsequent price hikes earlier this year.

The Indian PM who feared an increase in India’s fiscal deficit is quoted in Indian media to have said prices should be increased by five rupees per liter. The diesel price hike is likely to be enforced after the presidential election which falls after 19 July, 2012.

In Bhutan, gas and fuel suppliers are currently not aware of the statement made by the Indian PM.

The diesel price hike will have massive implications given the fact that most heavy-duty machinery in the country run on Diesel-powered engines.

The Bhutanese spoke to some of the notable people in these business strata.

The managing director of the Singye group of companies, Ugyen Tshechup said “the increase in the diesel prices may compel us to revise the whole company’s financial structures”.

Some in the mining groups said they heavily rely on the diesel to run each and every machines they possessed and they would have to revise the employee salaries too if that is to happen.

At the same time, few individuals based in the construction and building business are more or less skeptical on the Diesel price-hike.

Nonetheless, a recent post in an Indian daily newspaper quoted a senior oil ministry official saying that the diesel price-hike is inevitable.

Besides the construction business houses, the retail-outlets as well as the trucking industry in Bhutan will also be affected as most of these goods carriers are exceedingly dependent on diesel-run automobiles.

With the fiscal deficit which still looms large over the Bhutanese economy, the diesel price hike could be a huge blow on Bhutan’s efforts to revive itself from the recent financial crisis (which led to uncontrollable out flow of Indian Rupee).